Chelsea Follett: Joining the podcast today is Travis Fisher. He’s the Director of Energy and Environmental Policy at Cato Institute and thus my colleague, he has nearly 20 years of experience in energy policy, including leadership roles at the Federal Energy Regulatory Commission Institute for Energy Research Departments of Energy, Electricity, Consumers Resource Council, and the Heritage Foundation. And he joins the podcast today to discuss the way toward greater energy, abundance and the threats and obstacles to progress toward that goal. How are you, Travis?

Travis Fisher: I’m doing well. How are you doing?

Chelsea Follett: Great. So let’s start with some of the obstacles and threats to progress, of which I understand there are many in the energy policy realm. What should be on our listeners radar?

Travis Fisher: Yeah. Well, in the past few years, it’s become a target rich environment particularly I would focus on the regulatory regime. So the Environmental Protection Agency is doing a lot of stuff that is basically restricting the way we can generate power, the way we can use it, all sorts of things. The same with the Department of Energy in terms of things like they call them appliance efficiency standards for appliances and things like that. But really what they can do through the regulatory process, it turns into a de facto ban on all of this stuff. So we can’t really build the power plants that we would like to be able to build and use. We can’t buy the appliances we wanna buy. So there are just… It’s an incredible, I always call it a target rich environment. There’s so much going on right now, and I’m trying to do my part. I’m trying to be engaged in the… There’s usually a common period on a new regulatory proposal. So I try to get involved in those. But it feels right now like a game of whack-a-mole. It really is, there’s so much going on.

Chelsea Follett: And one of the things that has happened recently, I know is that the Inflation Reduction Act has quite a lot in it that impacts energy policy. Could you talk about some of that?

Travis Fisher: Yeah, so it’s kind of they’re getting you coming and going. There’s the subsidy paradigm, there’s the regulatory paradigm, and they actually work together against us. The IRA… Yeah, I always hesitate to call it the Inflation Reduction Act because we’re gonna do so much spending that I think it’s gonna actually increase inflation. But the main… So the thrust of it was the climate side, which is all subsidies. This is just a massive amount of subsidies for what the Biden team would call clean energy. Things like when solar, I think the vast majority is actually gonna go to solar, and it’s in the form of a production tax credit. So you generate the electricity, you get a tax credit. The problem that I see… ‘Cause that sounds kind of nice, the problem that I see is the amount of the subsidy is something that rivals the wholesale market price of the energy.

Travis Fisher: So my concern is that people aren’t gonna be worried about generating electricity for the purpose of doing well in the market. They wanna do well by subsidies so it’s not only a huge distraction, but it’s a huge… It’s a market distortion. It’s gonna cost taxpayers a ridiculous amount of money, something like $100 billion a year. And that plays out year after year after year. I actually think the subsidy train won’t stop until well beyond 2050. I think we should stop it before that, but I don’t think it will stop on its own so there’s just an incredible amount of spending and you can imagine all the damage that’s gonna do. It’s gonna have sort of second order effects where, let’s say you want to generate a lot of wind energy where there’s no people you can still collect the production tax credit that way, but you need to connect to the grid, and there isn’t ample transmission to be able to do that.

Travis Fisher: So they’re also gonna come back and ask for more transmission. That’s where it gets really dicey, where it’s not just the EPA or the DOE or subsidies or all that. Then you start getting into things like the FERC angle and all of that stuff, where like who’s gonna build the transmission, who’s gonna pay for it all these questions are enormous, and we sort of skipped past them just saying, “Well, we’re doing it for the climate, so don’t wanna ask questions.”

Chelsea Follett: All right. And you mentioned in an earlier exchange we had before I started recording this podcast, an interesting stat about how much people would be willing to pay with regards to actions to help protect the environments. Could you talk more about that? That was really interesting to me.

Travis Fisher: Yeah, so the subsidy regime on its own is gonna be something like upwards of $1000 per household in terms of the cost of it that is… It breaks down in terms of the population, it breaks down to something like $300 a year per person. We know not everybody’s a taxpayer and that’s not how households work, but the willingness to pay thing is sort of the, what you would expect to be the benefit side of it. So we know the cost pretty well. We can at least do some math and figure out what we think the cost will be. The benefit would be what people were hoping to get from the policy in terms of climate impacts and things like that. One way to try to address that is there’s a lot of polling about sort of, what would you be willing to pay if your monthly costs go up by X dollars, would you support that policy if it meant that it was going to address climate change?

Travis Fisher: And the most interesting thing that I’ve seen, ’cause I’ve been tracking this for a few years, it’s usually you lose about half the people as soon as you start asking them to fork up any cash at all. Which I guess kind of makes sense. The most recent one though, and I believe this is 2023, that number fell well below half. In terms of people who would support even a $1 per month, this is pretty low threshold. It’s like are you willing to pay $1 extra per month to address climate change? The answer… We used to be something in the 50% ish, 60% that fell to the 30s. Let’s see it the 38% in the last poll. So, you can see the difference between, the staggering cost of the policies versus what people are willing to pay for a climate policy in the abstract.

Travis Fisher: That mismatch is often not reported and I think it’s a glaring omission, sort of a even if folks say, because it’s interesting when you ask people, should we address climate change? Typically the answer is absolutely, why not? Then you go to that next level of, “Okay, but how much are you… How much of your own money are you willing to put towards the effort?” And it’s something like if you’re pretty well off it’s like, I don’t know, $5 a month. It’s not on the order of thousands of dollars per year, which is exactly what we’re doing now.

Chelsea Follett: So it’s out of line with taxpayer preferences, and it’s not even just the subsidies for mostly solar power. You said there’s a lot in there. I know there’s something about electric vehicles. Can you talk more about what’s in the IRA with regards to energy and environmental policy?

Travis Fisher: So I’m doing a policy analysis now that goes through the details, but the short version is it hits almost everything. And they’ve done… I give them credit in terms of the public choice theory of this, where if you spread the subsidies to almost every region, almost every state, almost every congressional district, then it becomes harder to remove, it becomes harder to repeal. So they’ve done a very clever job of making sure the subsidy is spread almost everywhere. So almost every industry, almost every state and region. So it’s everything from the manufacturing side of EVs and batteries and things like that. The point of sale. So there’s a $7500 tax credit if you buy an EV all sorts of things like that. The thing that I focused on the most, because I think it’s the biggest cost category, is that production tax credit for non emitting electricity production.

Travis Fisher: So that applies across the board, that applies to… I think the bulk will go to solar, but also wind. There’s a provision for existing nuclear, I think a higher amount would go to new nuclear, geothermal, all of that stuff. So it’s kind of a grab bag in terms of the how the subsidies apply, it’s a whole bunch of stuff. Probably the most lucrative relative to the market value is the subsidy for hydrogen. So if you make green hydrogen, which I don’t… I’m not an expert on the colors of… I’m not an expert on the hydrogen rainbow, but green hydrogen is when you do electrolysis through… So you have a renewable energy source doing the electrolysis of water, splitting it from H2O to hydrogen and oxygen. But I think it would also be green if you started with methane as the feedstock and separated out the hydrogen, but somehow captured the carbon I think that also qualifies as green. I’m not sure. But anyways, the subsidy for green hydrogen is well above market value. And part of the reason I bring that up is ’cause you begin to see how all these things tie together.

Travis Fisher: So a lot of what is in the IRA is actually a foundation for what the EPA is doing. So, EPA couldn’t have done its power plant rule and said, well, green hydrogen is a… The legal term, it’s supposed to be adequately demonstrated. It’s supposed to be a technology. You’re supposed to choose the best technology and it’s supposed to be adequately demonstrated. Green hydrogen is not, it’s just flatly not, but the case that EPA made was, “Well, the IRA throws so much subsidy at it that we can say it’s adequately demonstrated ’cause it’s adequately subsidized. And that’s the kind of thing where I’m like… I’m not sure people are aware of all the ways that sort of the subsidy elements tie into the regulatory side of things and it’s not a pleasant side. Once you start cracking into this stuff, it looks pretty ugly pretty fast but as you said, in terms of the willingness to pay, I think people should be aware of this and vote accordingly ’cause it’s really not… I don’t think it’s a popular policy once you dig into the details.

Chelsea Follett: All right, it seems like it costs more than most people would prefer to pay. And also it’s not clear that some of these things do address the environmental challenges that they are meant to. Like you said, this could subsidize power production in places where there is not really the demand, it could subsidize forms of power that do not produce enough energy to be worth that much investment. And it’s interesting that you said that this actually includes nuclear because until recently, many environmentalists and people who care about the environment actually opposed nuclear power. And so that would’ve been excluded entirely. Is that correct?

Travis Fisher: Yeah, and it had been in the past I think there was a production tax credit for new nuclear that I think the Vogtle Plant was trying to capture but I’m not sure there was the same amount of new built in nuclear that we were expecting when that tax credit passed but yeah I do… I guess that’s a positive spin the fact that it’s resource neutral or that it will be, so this is starting in beginning of 2025 is when the tech neutral PTC kicks in. But the fact that it applies across the board, I think is a benefit relative to the stuff we’ve been doing in the past. A very common state policy is the renewable portfolio standard. So a state would basically say, I want this percent of wind or solar or hydro or nukes or whatever, and they would just mandate it so at least there’s an open-ended quality to this, but it’s just a staggering amount of money.

Chelsea Follett: And of course there are in addition to the subsidies, a bunch of other, as you said, provisions in the IRA that affect this policy area I have heard something about electric cars standardization of charging stations that’s basically need to favor some electric car manufacturers and not others. What is going on with the policy pushed toward electric cars right now?

Travis Fisher: So that’s another example where the subsidy side sort of has a… I would call it a belts and suspenders approach. You subsidize it, but you also mandate it so the EPA has a… They’re calling it a… It’s an emission standard, but the only way that a car manufacturer can meet the standard is by selling a majority of EVs. So that would kick in, it’s a proposed rule at this stage, but if it goes final as it was proposed, that would make the majority of new car sales EVs by as early as 2032. So we’re talking very short order turnover but that also was in part… EPA was able to do that because of the EV subsidies. And the claim is that, well, with all these incentives, people are gonna do this anyways. So our new emissions guidelines are not gonna move the needle that much.

Travis Fisher: We’re basically just following where the needle’s gonna go anyways, but the only reason they’re able to make that claim is because of the very large subsidies. Ironically though there’s a theme that I’ve noticed that I wanted to touch on. It seems like bad ideas love to collide. They sort of come in groups. So in this case, it’s like we’re gonna mandate EVs, but then when you think about what goes into an electric vehicle, it’s a lot of batteries. There’s no two ways about it. I don’t know if you’ve ever seen sort of the bottom of a Tesla, it looks like somebody took a bunch of D sized batteries and just put them all together and that’s like the bed of the car, that’s like the bottom of it.

Travis Fisher: It’s just a ridiculous amount of material. And the question is, where are we gonna get that stuff? We, don’t have the ability to mine in the US. The permitting process is too onerous. And in fact there are mines that we’re supposed to get copper, things like that, things that you need for EVs but at the same time, the same admin is saying, “No, we’re not gonna open any mines.” So it’s almost like they don’t really connect the dots between the thing that they’re mandating and sort of the way to get there.

Chelsea Follett: So there’s the question of environmental impact, whether they’re even buildable and also consumer preferences, if this is really what people want. And there seems to be a pattern where there are a bunch of regulatory rules in this area that go against consumer preferences, where we hear a lot about things like washing machines and dishwashers that are just not as good because they are not allowed to be. Can you talk a little bit about that? What’s going on with appliances?

Travis Fisher: Yeah. I wish we could zoom out a bit and talk about economic efficiency, which include all sorts of things that we like as opposed to just energy efficiency, which is the… That’s the dogged focus of the DOE Energy efficiency program is like, well, we need to always use less energy, less water, all of that stuff. What that does though in practice is it gives you a less effective appliance. Personally, I don’t really care how much energy my appliance uses if it’s doing the job really well and really fast. There’s some threshold where I’ll start saying like, “Oh, wow, I can’t believe I used that much energy. I don’t think that’s what people are focused on these days. Now it’s more like, “Well, I ran the dishwasher and it didn’t really clean the stuff and it ran for two hours and by the time it was done, it still didn’t really do the job that I wanted it to do so I wish we would get back to this idea that we need to just use appliances for what they’re supposed to be used for instead of treating them as a thing to be minimized, which is kind of the way it’s been. In DOE’s defense that’s in statute, so they’re kind of held to this standard they’re made to do it, but I think we should just the statute.

Chelsea Follett: All right, that’s… Considering their hands are tied there because if also people are running their dishwasher multiple times then to get the same clean that they would’ve before, it’s not clear that actually even saves energy that… Tell me…

Travis Fisher: Well, and there’s also this really interesting if you search online, you can find these hacks of like ways to remove the thing that, let’s say it’s a shower head and they want it to use less water. Why is the DOE regulating my shower head? Worth asking, right? Well, it does. And it’s up to the DOE, this is where they do have some discretion in terms of choosing things to add to the list. I think shower heads are added later, but the idea is, well, you can take out the component. There’s like a piece that basically makes it a lower flow shower head where you can like go in there, tinker with it, take it out so all of these hacks are starting to come up. I think people are starting to outsmart the regs because I think that shows in a fundamental way that people don’t actually want the products that are being mandated.

Travis Fisher: And that’s the same with shower heads that don’t really work or all the appliances in the kitchen, all of that stuff. It’s kind of crazy that we ended up here, but I’m hopeful that we can address the underlying statute because even if it made sense back in the ’70s, and I’m not sure it ever did I think times are very different now.

Chelsea Follett: And that’s of course just one example of something the DOE is doing. You are much more plugged into this. What else should people be aware of that’s going on from the DOE?

Travis Fisher: I mean, there are a handful of programs. One thing that I think is a little underhanded that I’d like to flag for folks is that there is some money in the Inflation Reduction Act that’s basically it’s federal money that goes down. And in some cases it goes through a DOE grant where it’s basically bribing states to come up with a new, you know, climate program. And then it’s really tricky because if the state rejects the money, which they can, then it’s actually up to like local government can step up and claim that money that was rejected by the state. So we’ve seen that in Florida, for example. So it’s this weird thing where it was a, you know, the IRA was passed under a budget reconciliation process, but it really did establish new policy in a lot of ways.

Travis Fisher: And that included in terms of there’s now a federal bribe to set up a climate program at the state level. And if you don’t do that, then of course the cities can step up and claim that cash. There’s just a lot of cash on the table, and I know that sounds intriguing to a lot of people. That’s your cash. So it’s just… I see it as an abusive process, but it’s not really getting a lot of coverage. And I wish it would because I… Which is part of the reason I’m doing the paper about the IRA, there’s so much in it and it can be overwhelming pretty fast. I mean, the statute itself was something like 270 pages and the energy portion of that is about a third of it. So…

Chelsea Follett: Wow.

Travis Fisher: It’s just a lot of very dense language and folks are still like… Here’s an example too. There’s the statute part of it, which is already confusing. And then there’s the stuff that the IRS has to work out later. So there’s all sorts of like implementation guidelines on how exactly do you qualify for this subsidy versus that, what’s the threshold? So understanding and following the IRS guidance is another, it’s like a full-time job for a lot of people. So it’s just a very complicated I think intentionally complex process that it’s kind of like, well, let’s just get the money out the door before anybody realizes what’s going on. And then it’s gonna be really hard to repeal because, you know, let’s say you’re a politician and you have an IRA supported factory that just opened up. It’s gonna be really hard to turn around and say, actually, I’m gonna vote against this thing that just got the factory built. It’s pretty, it’s genius on the one hand, I think it’s like an evil genius type approach, but I mean, for right now at least it’s working. I’m gonna hope to get it repealed because I think the policies in the IRA are just awful. But you know, step one is to raise awareness of all these issues.

Chelsea Follett: And that’s what you’re doing. Are there any particularly egregious cases that you’d like to bring to people’s attention maybe of money being spread by this act to something that is very clearly not going to have an environmental benefit? It’s just a giveaway that’s ineffective and expensive to taxpayers?

Travis Fisher: One thing that was… That really stood out to me was a lot of the money is going to the DOE’S loan programs office. And people will know that name. That was the office that gave the loan to Solyndra.

Chelsea Follett: Wow.

Travis Fisher: Which was sort of this epic failure. I think it was only on the order of like $500 million, which is weird to say. In hindsight, it was only half a billion dollars. And I think the loan program’s office already had, you know, dozens of billions of dollars to play with. And the IRA just put that all on steroids. I think it’s in the hundreds of billions of dollars now. And there was some testimony from the inspector general from the DOE, and this was before the Senate Energy and Natural Resources Committee. And I believe it was after I started at Cato. So after August, somewhere in the fall of last year, the testimony from her was Stark and it was alarming to me. She was basically saying, there’s so much money moving around that I, as the Inspector General have no chance of catching fraud.

Chelsea Follett: Wow.

Travis Fisher: And she, at the panel with the director of the loan programs office right next to her, and they’re basically asking him, hey this is a ridiculous amount of money and aren’t there some sort of foul play processes going on with how you would access that money? And he sort of turned into this like puppet master type guy where he’s just moving around massive amounts of money. That’s the one thing that I’m like, even if you wanted to do… Even if you wanted to spend this amount of money, even if you’re in that, small minority that says $1 a month, that’s nothing. I’ll you know… A $100 a month, I’m willing to pay a bunch to address the climate issue.

Travis Fisher: Even if you’re in that camp, wouldn’t you want the money to be spent on what it was supposed to be spent on in like a not fraudulent way? But to have the Inspector General testify before the Senate and say, there’s no way I’m gonna catch all the fraud that’s about to happen. That took me aback, that was the kind of thing where I was like, this is too much money. This is too fast. We have no control over it. The fraud and abuse is gonna be rampant. And this is the kind of thing that you hate to be right about, but I think a year from now we’re gonna look back and say there was a lot of stuff going on that we just had no way of catching.

Chelsea Follett: Are there any mechanisms for accountability? What are the standards by which, you know, these programs getting money through this act are being judged? Is there some you know, amount of CO2 that something has to… Is there some amounts per dollar that we are getting allegedly out of this? Or are there no standards?

Travis Fisher: Well, it depends on the program and actually the track record of the Loan Programs Office to give them credit, they would say they’re actually doing pretty well, that they’ve on net, they’ve maybe made money for the taxpayer. And that raises all sorts of interesting questions about like, aren’t you there? Don’t you exist to give very high risk loans? And shouldn’t you be on net losing money? You shouldn’t be a marketplace. But I mean, they do have the standards of due diligence. And I worked with the staff there when I was at the DOE very well-meaning very smart people. I just think at the end of the day, there’s gonna be, even if they try their best, there’s just so much money and it’s not really their money. This sort of applies across the board. So if you’re spending other people’s money, it’s just not the same. Even if you try your best, it’s not the same.

Chelsea Follett: Fair enough. And we’ve been talking mostly about the IRA and the DOE. What about the EPA, what sort of regulatory things are going on there that we should be aware of?

Travis Fisher: So the way I would characterize it, they’re off the rails. I mean, I’ve long disagreed with their policies and I didn’t like the way that they approached, you know, the clean power plan from this goes back to like 2015. This was the idea that you can use the Clean Air Act, you can use statutes that have been around for 30 or 40 years and sort of reimagine them. And that’s ultimately what got the Supreme Court to name the major questions doctrine. It was the EPA’s overreach that got them in that hot water. And you know, that was eventually… There was the Clean Power Plan that was checked by the courts that said, you have to go back to the drawing board. This is not the way to do it. And it was this idea that you can reimagine the whole power grid as a system.

Travis Fisher: So then EPA is like, well, I know the best system for emissions reduction. It’s basically, you just shift things around and then it’s this central planning exercise at the EPA based on no congressional authority. That was the other thing, was the, I mean, if it’s a major question, it needs to be decided by Congress. It needs to be decided by elected representatives of the people. EPA basically took that court case and said, it was like a hold my beer moment. They were just like, we’re just gonna do it again. It’s gonna be even worse. But it was on sort of the coattails of the IRA money. They were able to say, well, now we’ve changed our minds. The new best system is either carbon capture, which is not adequately demonstrated, or green hydrogen also not adequately demonstrated. So they just went back and said, we’re gonna… Instead of saying we hear you Supreme Court, we need clear authority to do whatever we’re gonna do.

Travis Fisher: They just said, we’ll, just take another shot. So, interesting thing here… And the reason I think there’s, you know, I’m hesitant to say foul play ’cause I don’t wanna, who knows what people are thinking? I can’t judge anyone’s intentions, but the structure of the proposal, the proposed, the new power plant rule was that it would take effect immediately upon the date of the proposal. So there are a lot of people, so if I were trying to build a gas fired power plant right now, I don’t know what rules I’m gonna be facing. Is it gonna be the proposal? Is it gonna be what’s in the final rule? The final rule hasn’t come out yet. But you’ve basically been put on notice that if you’re gonna build a gas fired power plant after, you know, the published state for the proposal was in May of 2023.

Travis Fisher: If you’re gonna build a power plant after that who knows what kind of rules you’re going to face. But here’s the tricky part, I think it’s my hunch that that uncertainty is something like you know, instead of a bug, it’s a feature like the EPA sort of wants that uncertainty so that it’s really hard to build a new power plant. You know, if you’re trying to build a gas fired power plant, if you’re trying to build anything that’s, you know, that EPA deems green you know, green light on all things green, but we do need gas fired power plants to keep the grid up. So it’s one of those things where I’m not sure that they know how much damage they’re inflicting just by issuing a proposed rule. And it’s not supposed to be that way. You know, it’s supposed to be a final rule that’s supposed to establish the compliance date.

Travis Fisher: So that’s one example of sort of how they’ve colored outside the lines and gotten away with stuff that I don’t think they should have gotten away with. I think as soon as the final rule comes out, it’s gonna get a court day, ’cause it’s gonna be easy to make the case that EPA is doing what they were just told not to do. Just last, well, I can’t say last year, it’s 2024. In 2022 they were told you can’t do this. And in 2023 they said, we’re doing it again. So who knows where it’s gonna go, but it’s created so much uncertainty that it’s the uncertainty itself that I think EPA sort of has fun with. And there was a… And a really telling quote from Gina McCarthy, who was the EPA administrator under Obama. Basically this was talking about the Mercury and Air Toxics Standards.

Travis Fisher: So it’s a different rule, but the same idea of like, if you own a power plant, how do you know how to comply with the rules? And her statement, this is on the Bill Maher show actually. Her statement was something like, well, even if we lose in court, and she of course said she didn’t think she would as is the Matt’s rule. And I think she was nodding at the clean power plan too. It’s like, even if we lose in court, everybody’s already complied. So it’s basically had the effect that we wanted even if it’s found unlawful, and I think that’s the same approach they’re taking here.

Chelsea Follett: That is very concerning. So it sounds like on the one hand there’s a picking of winners and losers, which they don’t have the best track record on everything from historical environmentalist, opposition to nuclear power to support for companies like you know, Solyndra through the government. And on the other hand, there’s also this regulatory regime that strangles new production of energy potentially. Could you elaborate on all of that?

Travis Fisher: Yeah, so I think the bind that we’re in right now is really tricky. We actually are seeing new electricity demand. We’re seeing demand growth on the power sector that we haven’t seen in a very long time. So those of us who are like grid nerds and follow this are like, well, it plateaued around, you know, the mid 2000s and it really hasn’t come back. The game changer here could be the data center and new uses for data all the time. Trouble is, if you wanted to go gangbusters on like AI or any other thing you’re using big data for the power sector is gonna hold you back. Those are very electricity intensive processes. So the question is, even if we wanted to go that route and sort of do a high energy digital world, can the grid support that?

Travis Fisher: And, you know, for most of my career, I would say, yeah, we can sort it out. The combination of the EPA rules and everything else going on. I’m not sure anymore. Even if you can build the power plant, and I realize I’m gonna depress everybody, but even if you can build the gas fired power plant, you still need to be able to frack for the gas, which really hasn’t been impacted yet. So we need to protect sort of the hydraulic fracturing process itself, but we also need to build pipelines. That’s gonna be very tough to do. That really is, when it comes to interstate pipelines, it’s a FERC issue. I hope they continue to approve pipelines. I don’t think that’s a slam dunk. So I’m worried about that too. It’s like, well, even if you wanted to power the existing plants, you’ve already got a plant.

Travis Fisher: If you can’t get gas to it, it’s not helpful. So all sorts of layers to this, but the idea that we can be a high energy, you know, sort of a… You know, this new era of electricity growth, can we even do it? That’s a huge question. Everybody’s asking it now. Everybody has different answers, just folks who wanna build a lot of transmission lines and do it with renewables and things like that. I think that’s a very expensive way to do it, but technologically, in an engineering sense, it’s doable. But yeah, it’s an open question. Can we even meet the demand? With all the constraints on supply I’m skeptical.

Chelsea Follett: And that relates to this mindset that is catching on, whereby some people believe that the only way to protect the earth is degrowth, right? A less economic activity. In some cases, fewer people even they want a smaller population. And I know that you’ve commented on this mindset before. What are your thoughts on that?

Travis Fisher: Yeah, I think I have a physical reaction. I think I winced when you said degrowth. I just there’s so much about it that’s wrong. I mean first of all, on a global scale, if we don’t have growth, like billions of people don’t have access to the same amount of energy that our appliances do. I mean something like a billion people don’t have enough electricity to even like power a US fridge. These are really depressing stats. But so there’s the global angle on it, but already, even if you’re in an already high energy society, I think we’re gonna need even more. I mean, the data issue is a great example. So I really don’t… I mean, at the same time that I want to engage with everyone. I don’t have a whole lot to say to the degrowthers.

Travis Fisher: I mean as long as it’s a voluntary choice on their part, I would say degrowth yourself and that’s fine. Do what you want with your own family. Let’s not make it public policy though, which is the tricky part because I think a lot of it does factor into public policy. It bleeds over to this, like, well, a great example is all the energy efficiency regs. Like, well, if less is always more then zero should be ideal, right? If we’re possible to go energy negative, we should do that too. I just don’t buy into that at all. And I can’t see eye to eye with those people. Especially on the population growth side. I’ve had a lot of trouble with the fact that Paul Ehrlich still gets traction. You know, he was the author of the population bomb, what was that, 1968?

Travis Fisher: I’m gonna get the year wrong. But he’s in his 90s and people are still… He still showed up on 60 minutes. And it’s a crazy thing. I have to give it a little, so the Steel Man version is, there is something about the running out of resources idea that captivates people, and I don’t know why that is. But I personally felt a huge sense of relief when I fully understood the Julian Simon approach to the world, which is basically, we’re never gonna run out of resources. In fact, a resource is some combination of the physical world with ideas, with technology, with new ways of doing things. So we actually never run out because the only thing that’s holding us back is our own growth, our own imagination, our own technology. So like the shale boom is a great example.

Travis Fisher: Like if you told me that rocks that are over a mile deep would be powering the world right now if you’d said that 20 years ago, it would sound kind of crazy. Like we knew, I think we knew that there were hydrocarbons trapped in shale rock. It was just a question of can we ever get it? And it’s not a resource if you can’t get it, but we figured out in amazing ways how to get it. And we’ve gotten so much of it. We’ve got so much now that our former we used to have gas terminals that were built for export sorry, I got that backwards. We used to have gas terminals that were built for import, now they’re built for export. And that’s a huge shift. It’s a huge shift in mindset, but I think it really exemplifies the Julian Simon view of the world, which is, if you think resources are actually finite, then that gets you in that posture of like, well, maybe we should degrowth, we throttle everything down, fewer people, all that stuff. If you realize that resources have no natural cap at all, because it’s some combination of applying our minds to the planet that is just a completely different, all this stuff like climate anxiety and doomerism and all that stuff. I think all of that would fade away if people fully understood the Julian Simon view of the world.

Chelsea Follett: And I think it becomes even clearer when you look at how we’ve overcome past environmental problems as a species. Like at one point there was an absolute crisis of there being too much horse manure in cities and people didn’t know how to deal with that. And then people switched to cars. Oil had been a waste product, right? People didn’t even see that as valuable. And now that problem has completely gone away. We have new problems. But there are ways we can potentially overcome those, right? With human ingenuity. To what extent should we be worried about regulations restricting potential new technologies that could help to protect the environment and solve other problems?

Travis Fisher: I think there are almost too many hurdles to talk about them all. One great example is, so we have a Nuclear Regulatory Commission and it does regulate existing nuke plants. And that’s basically, some would say that’s all it does, ’cause there really hasn’t been a new nuclear plant in the US, aside from the expansion of Plant Vogel in Georgia, which was, I don’t wanna say just two units ’cause they’re large, but that’s in the whole existence of the NRC. We’re talking multiple decades and they haven’t been able to approve a new plant. And even in the case of all the stars aligned in Georgia, you sort of had this vertically integrated utility, you had a state that was behind it and all of that.

Travis Fisher: It actually also got a loan guarantee from LPO, side note. But we just, we need to be better at doing new stuff. It’s really gonna put the industry to the test when we come up with brand new things. There’s the small modular reactor. There’s again, talks of fusion. I try not to roll my eyes when folks talk about fusion, because I’m like I’ve been hearing about fusion since I was a child and it’s always just around the corner and it’s still just around the corner and I’m excited that it could actually happen. But at the same time, I can’t imagine a regulatory commission that is gonna say, yes, absolutely, let’s do fusion or yes, let’s put SMRs on every factory, which is kind of on the order of what we would need in terms of new technology. But yeah, the barriers are everywhere. So some ideas, if I could frame it positively, some ideas are well, we can just sort of leave the existing NRC to regulate the safety of existing plants. But let’s come up with a new paradigm for all the new stuff. I’m actually on board with that in principle. So we’ll see where it goes. But that’s that’s the big question is even if we come up with the best ideas in the world, is there gonna be some bureaucrat saying no?

Chelsea Follett: Or funneling resources toward solutions like green hydrogen, which might be the next big thing, I don’t know. But what if it’s not? What if that is a huge waste and actually those resources and research could be going toward a better technology?

Travis Fisher: Yeah, and it’s gonna be tough to as long as the subsidies are on the table, it’s gonna be hard to turn away, even if people know that it’s not a good technology. Here’s an example, I’m gonna probably upset some people. I would say that the majority of the ethanol that we produce by using corn is basically a pure subsidy play. There’s, of course, an amount of ethanol that the market would bear that we would, of course, demand it raises the octane of gasoline, for example, it’s got a market niche. Most of the people that you talk about why are you growing corn? It’s like oh, I can turn it into ethanol and I can make a lot of money. Oh, how are you making the money? Subsidies. And it’s just gotten it becomes its own business. So I do worry about things like that where you don’t really get, you’re not sending the market signal to stop doing what you’re doing. If there’s a subsidy for green hydrogen, we’re gonna get green hydrogen, whether it makes sense or not. So I see that all the time. I am concerned about that.

Chelsea Follett: Another policy that we’ve been hearing a lot about recently would be carbon taxation. There were recently those proposals for a carbon tariff or a carbon tax on imports that you responded to. I know some people who support the idea of a carbon tax ’cause they say it uses market mechanisms, but there have also been a lot of criticisms of it. What’s your take on carbon taxation?

Travis Fisher: So it’s one of those fun theories to talk about. And if you if you squint really hard, you can see how it might work. There is sort of the Pigouvian approach to internalizing externalities. And I’m on board with the textbook approach. I kind of like it. The trouble is actually getting to any of the things that you could in the textbook context, you can just assume, assume a can opener is just it just exists. So one of the things that you would need to assume for a carbon tax to really work is and by work just internalize the externality. I don’t mean actually get the climate outcome that you need. Because let’s be honest, the US is a drop in the bucket and the global CO2, all that.

Travis Fisher: But just to sort of make the idea of a carbon tax work, you would need to know the marginal social cost of carbon. And that once you sort of take a magnifying glass to that concept, it looks really bad up close, really, really bad. The value of it hinges more on the discount rate that you choose than anything else. So if you wanna follow the rules and do sort of a cost benefit analysis approach, using 3%, the cost is kind of high using 7%. My gosh, it falls almost nothing. So which discount rate do you use? And that’s it. Every time the concept of a carbon tax comes up, I highlight these issues. And then what tends to come back is, well, shouldn’t we do it anyways? I think unless you can really sort out every problem with the policy, I don’t see the benefit in going forward with it. What I hear from a lot of folks, too, is wouldn’t you trade all of the subsidies and mandates and regulations and all that stuff, wouldn’t you trade all that stuff for a carbon tax? And my answer is, it depends.

Travis Fisher: I actually don’t think that you can do all the trading. And in fact, it’s not clear that even if you had a federal carbon tax, it’s not clear that you could preempt all the different state policies that are going on. So that sort of grand bargain is talked about a lot, but I don’t think it’s possible.

Chelsea Follett: Right. It also seems like if it were implemented, in reality, it wouldn’t be in place of all the existing regulations, it would almost certainly be in addition to them just politically. Isn’t that correct?

Travis Fisher: Yep, that’s exactly how it would work out. I mean, so the idea that, for example the DOE efficiency regs that we’re talking about, the EPA power plant rule, I’m not sure that that stuff would go away. In fact, if you’re expecting an act of Congress to stop that stuff, I mean, they never were operating under an act of Congress to begin with, in the EPA case with power plants, for sure. So I’m not sure that you could undo all that stuff. And in fact, if you wanted to do both, I think there’d be very little that Congress could do to stop EPA under the current paradigm to actually to do both.

Travis Fisher: Another great example is some folks point to Canada, and they’re isn’t Canada doing it right? They have a carbon tax and dividend program. And so for a bunch of people, it just looks like a check that comes from the government. And that’s sort of a thing that people have gravitated towards well, that’s nice. Even that, which a lot of people point to as sort of the example of what to do. Do you recall a couple months ago, Trudeau, this was going into this winter, he proposed that the East Coast provinces would not be subject to a carbon tax on their heating oil.

Travis Fisher: He actually, he said that he said that it would be a waiver of the carbon tax for heating oil in general, only the eastern provinces use heating oil. So you can always find a way to basically benefit the people you like politically, you basically do a broad based tax and then give waivers. So I would expect that in the US too, even if we had, which is sort of the economic argument for us well, it needs to be broad based, everybody needs to be rowing together. I think even if it starts that way, the politics of waivers and trying to favor the folks who voted for you, that’s always gonna be there. So even in the Canada example, even in sort of the best real world example we can find, it didn’t take them long to fall into the politics. They’re well, I’m going to give waivers for my friends. That’s exactly where it went.

Chelsea Follett: And it’s been repealed in Australia, correct? I know some places have dropped carbon taxation. And there’s the question also the costs of any policy, not just the possible benefits. With a carbon tax, doesn’t it really raise the price of practically everything?

Travis Fisher: Yeah, and if you wanted to if you wanted to tax CO2 at the what they’ve actually done, so what the Biden team has done is they’ve updated, of course, that there’s always an update, they’ve updated the estimates of the social cost of carbon, and the Obama era was like $51 a ton. The Trump era, they use a different set of assumptions, and it was more like $7 a ton. What the EPA is trying to do under Biden now is they’ve proposed $190 a ton. So this is almost a quadrupling of the Obama era price of carbon. So there’s always stuff like that well, if it can be anything you want it to be. And the amount of the tax really does hit people in terms of this would hit the price of gasoline, price of electricity, price of all this stuff. And then that’s also baked into all the transportation costs, which then show up in literally everything that gets baked into the shipping cost of all your food, everything. So, yeah, it’s basically a tax on everything at an amount decided by a bureaucrat that you can’t argue with.

Chelsea Follett: And there’s no limiting principle that it can just…

Travis Fisher: There really is not. And the other thing that’s crazy about it, and this is once you once you dig into the weeds, you can see how absurd this is. So a lot of the models look at damages from an increase in CO2 concentrations to the year 2300. I’m not sure we know what the year 2300 is gonna look like. And I’m not sure we should be worried about costs that might be hitting people in the year 2300. They’re probably going to be far wealthier than we are, and they’re going to have problems that we couldn’t anticipate. If you’d sort of do the back cast, it would be like talking to somebody in, I don’t know, the year 1746 and saying, well, shouldn’t you be paying a carbon tax because it’s gonna hit us in the year 2024? It’s just the intergenerational assumptions and all that stuff. It’s really kind of once you scrutinize it, it looks a lot like nonsense. It’s not gonna… You won’t make a lot of friends saying that the social cost of carbon is BS. But once you dig into all the assumptions that sort of make it what it is, it falls apart pretty quickly.

Chelsea Follett: So we’ve been talking about a lot of fairly depressing things, different obstacles and threats to progress on the energy and environmental fronts. But we like to typically end this podcast on an optimistic note. What are you most optimistic about when it comes to energy and environmental policy?

Travis Fisher: So I think there is a flip side to this idea that there’s a very low willingness to pay to address climate change. The flip side is the existing policies that we have now, the policies that have only grown in the past few years, I think people will get sick of them. I think especially this idea that you get into sort of the United Nations framework and global agreements and stuff like that. The idea that we would stick to something like that, knowing what it’s gonna cost. And this whole net zero push is a great example. It’s so easy to just say, yeah, I’m pro net zero. It’s really difficult to say, I’m gonna drastically change my life, increase the cost of everything, and in fact, get used to the idea that I don’t have electricity for this cause that’s easy to say it’s hard to execute.

Travis Fisher: I think I’m optimistic that when people realize what it takes, they’re gonna say actually, this thing, this climate burden, climate anxiety, net zero goals, all of this stuff I’ve been carrying around, it’s just a bag of bricks, and I can drop it. I can choose to drop it and it’s not actually gonna have any effect globally at all. And I can just go and live the way I wanna live. I’m excited that people are gonna start realizing that. I hope they do because the way that it works is it’s always well, of course, everybody wants to address climate change. And the common question is it real? Do you believe in it? It’s kind of an absurd framework. Wow, yeah, we’re emitting more CO2 than we ever have. And that might not even be a bad thing. And it depends on a ton of assumptions. But that whole approach of worrying so much about that, I see people basically, and the polling shows it. So the 2021 poll that said 57% of people are happy to pay $1 a month, it’s fell to 38%. The fact that that number is falling is very interesting to me, and tells me that maybe people are catching on. So I am optimistic about that, that there’s so much worry going on right now, that’s unnecessary, we can just drop it.

Chelsea Follett: I’m hopeful there as well. It seems like this false choice that’s being presented, this idea that you have to have more human suffering in order to protect the environment, that doesn’t make any sense. Again, if you look at the history of how our species has overcome environmental solutions, environmental problems in the past.

Travis Fisher: Yeah, and it’s a quasi-religious thing. And I think the answer is always more reason, more rationality. And I think the more of a skeptical, rational light that people shine on this, we can sort of emerge from the dark ages you know.

Chelsea Follett: That is the perfect note to end on. Thank you so much for talking with me, Travis. This has given, I think, everyone a lot to think about.

Travis Fisher: It was great to join you. Thank you.